FTX Set to Disburse $900 Million in Fifth Restructuring Payout as Senate Rejects Clemency for Founder

FTX will begin distributing approximately $900 million to eligible creditors on July 31 as the failed crypto exchange continues repayments under its Chapter 11 bankruptcy plan, bringing total distributions since 2025 to nearly $11 billion.

Eligible holders in the plan's Convenience and Non-Convenience classes that satisfied pre-distribution requirements by the June 16 record date are expected to receive funds within one to three business days through their selected distribution provider, including BitGo, Kraken, or Payoneer.

The fifth distribution follows a $2.2 billion payout completed in March and continues one of the largest creditor repayment efforts in the crypto industry's history.

According to FTX, customers with allowed Dotcom customer entitlement claims will receive an additional 9% distribution, bringing cumulative recoveries for that class to 105%. Allowed U.S. customer entitlement claims will receive a 5% distribution, also reaching 105% cumulatively.

General unsecured claims and digital asset loan claims will each receive an additional 3%, bringing cumulative recoveries to 103%, while convenience claims will remain fully paid at a cumulative 120%.

The estate said customers who elected to receive payments through a distribution provider irrevocably assigned their cash distributions to BitGo, Kraken or Payoneer, which will process the transfers directly.

FTX also said the Preferred Shareholder Remission Fund Trust will make a second payment of $18 million to eligible preferred equity holders on July 31. The payment will increase total distributions from the trust to $95 million.

Creditors seeking future distributions must complete know-your-customer verification, submit required tax documentation and onboard with an approved distribution provider before the applicable record date, according to the company.

The convenience class largely consists of retail customers and smaller creditors, while the non-convenience classes include larger and more complex claims. The bankruptcy estate has generally repaid retail creditors at between 118% and 142% of the U.S. dollar value of their holdings at the time FTX entered bankruptcy in November 2022, although some creditors have criticized the process because repayments are based on petition-date valuations rather than returning digital assets in kind.

The latest distribution comes as legal proceedings related to the exchange's collapse continue. In May, law firm Fenwick & West agreed to pay $54 million to settle claims that it helped facilitate conduct tied to FTX before the exchange failed, while denying wrongdoing.

Separately, the U.S. Senate this week unanimously approved a resolution stating that convicted FTX founder Sam Bankman-Fried should not receive executive clemency after he sought a presidential pardon. 

Senator Cynthia Lummis said the former FTX executive was attempting to avoid the consequences of his conviction, while Ruben Gallego stated Bankman-Fried had "shown no remorse" and continued to portray himself as a victim. President Donald Trump said in January he had no plans to pardon Bankman-Fried.

Bankman-Fried was convicted in 2023 on seven fraud-related counts and is serving a 25-year prison sentence. He has continued to challenge the circumstances surrounding FTX's bankruptcy while pursuing an appeal.

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JAN MATULA

Founder of Bitcion.Blog

Graduate of Bratislava University of Economics and Business, experienced Forex and Stocks trader since 2008, early Bitcoin investor and crypto trader since 2021.

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